Vietnam forecasts May CPI to rise

Vietnam forecast on Wednesday that annual consumer price inflation in May would rise to 7.31% on higher fuel and food costs, up from 7.16% in April.

The rise in the consumer price index (CPI) is above a government target to keep annual inflation this year at less than 7%.

The General Statistics Office released preliminary inflation figures showing food prices this month would be 14.6% higher than last May, above a rise of 14.3% in April from a year earlier.

The government report also estimated consumer prices this month would edge up 0.77% from April, following an increase of around 7% in petrol retail prices as of May 7.

The estimated consumer price rise this month against April is higher than a Trade Ministry forecast of 0.5% which was released before the fuel price increase.

Prices rose only 0.49% between March and April.

Food prices account for 42.8% of the price basket Vietnam uses to calculate inflation. Vietnam's inflation data is not seasonally adjusted.

The Finance Ministry has projected to control Vietnam's 2007 inflation at less than 7%, in line with a government goal of keeping the rate below the annual economic growth target of 8.5%.

But it has not revised its target since the fuel price rise early this month which has a chain effect on production of items essential for the nation's industry and thus the overall economic growth such as coal, cement, steel and electricity.

While prices this month are 7.31% above last May, the accumulated CPI growth this month is estimated at 4.32% since last December, the government's statistics office said.

The World Bank forecast Vietnam's consumer prices this year would be 6.5% higher than 2006 while the International Monetary Fund estimated a year-end inflation rate of 7.1%.

Source: Reuters